Friday, July 6, 2012

I
found this interesting little article on the American Enterprise
Institute website entitled "Only the public sector is 'doing fine',",
referring, of course, to President Obama's June 2012 comment about job creation
and the private sector as shown on this video:

The
President noted that the biggest unemployment problems stemmed from cutbacks in
employment at the state and local government levels and that Congress needed to
step up and help out because these levels of government had fewer revenues
coming in. Is that true? Is high unemployment related to state and
local government cuts?

Here is a screen capture from the Bureau of Labor Statistics
website showing the non-seasonally adjusted unemployment rates for various
industries, including government, for May 2012, comparing rates from one year
earlier:

Hmmm.
Notice that government workers have the lowest unemployment rate by a
very wide margin if we exclude workers involved in mining, quarrying and oil
and gas extraction and those employed in the financial sector. The 4.2
percent unemployment rate is up slightly from the rate one year earlier,
however, it is less than one-third of the unemployment rate of construction
workers and less than half the unemployment rate of agricultural workers, those
employed in leisure and hospitality and those employed in professional and
business services.

From
the FRED website, here is a graph showing the total number
of government employees at all levels since the 1940s:

In
May 2012, there were 21.969 million government employees, down very marginally
from its peak of 22.997 million in May 2010 and down only 2.4 percent from the
end of the Great Recession. Just so that we can put this number into perspective, in May 2012, there were a total of 133.009 million non-farm employees in the United States. This means that one in six employed Americans worked for some level of government.

Here is a graph showing the number of
Federal government employees since the 1940s:

Other
than the one-month blip to 3.4 million in May 2010, the number of Federal
government employees has been stable at between 2.7 and 2.9 million since the
late-1990s.

Here is a graph showing the number of
state government employees since the mid-1950s:

The
number of state government employees has been stable at between 5.0 and 5.2
million since the beginning of 2005 and, dropped by a tiny 1.3 percent since
the end of the Great Recession.

Lastly,
here is a graph showing the number of
local government employees:

The
number of local government employees has dropped from its all-time peak of
14.605 million to its current level, a drop of just over 500,000 employees or
3.6 percent, not an insubstantial number but out of the 13 to 15 million
unemployed in the past two years, unemployed local government workers
contribute a rather small fraction. Just so we can put the small number of local job losses into context, here is a graph showing the job losses in the American construction sector since the beginning of the new millennium:

That single private sector has seen job losses of 28.6 percent or 2.21 million workers since construction employment peaked in the spring of 2006.

Now,
let's look at a graph that gives us a historical perspective on public
sector vs. private sector unemployment between 2000 and 2011:

It looks to me like the public sector has
"suffered" from far lower unemployment rates for the last decade than
the private sector when the data is adjusted for education and experience levels,
doesn't it? Over the past 11 years, the unemployment difference between
the private and public sectors has averaged 3.3 percentage points, suggesting
that, as many of us suspect, working in government is far more secure than the
private sector despite the President's protestations to the contrary.

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About Me

I have been an avid follower of the world's political and economic scene since the great gold rush of 1979 - 1980 when it seemed that the world's economic system was on the verge of collapse. I am most concerned about the mounting level of government debt and the lack of political will to solve the problem. Actions need to be taken sooner rather than later when demographic issues will make solutions far more difficult. As a geoscientist, I am also concerned about the world's energy future; as we reach peak cheap oil, we need to find viable long-term solutions to what will ultimately become a supply-demand imbalance.